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Monday, 17 April, 2000, 16:11 GMT 17:11 UK
MoD to sell-off research agency
tornado
Dera worked on the Tornado
The government has announced it is to partially sell-off the UK's defence research arm.

Defence Secretary Geoff Hoon disclosed plans to float a 75% stake in DERA, the Defence Evaluation and Research Agency.

Mr Hoon has insisted the most sensitive areas will remain under state control but that has not prevented concerns being raised about national security.

Under the plans, unveiled in a Commons written reply, the agency will be split into two parts.

Porton Down

A "core" of staff will stay in the Ministry of Defence to give the government access to "in-house impartial advice" while "specific very sensitive areas" will also stay under state control.

The government will keep control of DERA's biological and chemical weapons research operation, the Chemical and Biological Defence Sector at Porton Down, Wiltshire.

The privatised part of DERA could gain a stock market listing by 2001 and the new company will have the ability to "grow its business and diversify the wealth of knowledge it has built up" from commercial freedom, Mr Hoon said.

The government will initially keep a stake in the company, the MoD added.

Ministers will now invite reaction to the latest proposals on the public-private partnership for DERA, Mr Hoon said.



Iain Duncan Smith: "All about money"
He said the proposals sought to separate the functions that could be developed best "within a PPP" and those the government was better able to carry out.

"Around three quarters of DERA would be turned into a company which we would hope to float on the stock market as soon as its potential is judged to be suitably developed."

Mr Hoon did not give a figure on how much DERA could be worth on flotation.

Earlier, shadow defence secretary Iain Duncan Smith said any sell-off could enrage the UK's allies in the US who would be concerned about the national security implications of privatisation.

He said that a break-up of DERA would be very problematic.

"DERA has a huge impact on national security, because the work they undertake has a bearing on future defence equipment, much of it very, very secret equipment used by government and the defence services."

The Tory spokesman said any sell-off would be "all about money for the Treasury" after the defence budget was cut by 800m a year .

"The government is scratching around for money," said Mr Duncan Smith.

"They really care nothing at all about the effectiveness of our armed forces. This is all about damaging defence yet again."

'Compromised'

Labour chairman of the Defence Select Committee, Bruce George, said the all-party group had twice produced reports condemning plans to sell off parts of the defence research establishment.

He said: "We feel that DERA as presently constituted is capable of delivering the goods.

"Sir John Chisholm, who is in charge, has done wonders and we believe he could do further wonders, but within a looser structure and not semi-privatisation.

"I don't think the organisation should be split up. The co-operation which has for many years been so strong with comparable organisations in the US might well be compromised."

Committee members met senior US officials last summer and were told that, while Washington would not seek to intervene in any sell-off, it would have a series of consequences, said Mr George.

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